In the Matter of the Interest Arbitration Between Lane Rural Fire/Rescue District and International Association of Firefighters, Local #851. IA-13-06.

The parties in this matter are the Lane Rural Fire/Rescue District (District) and the International Association of Firefighters, Local #851 (Union). The arbitration was held pursuant to the interest arbitration provisions of the Oregon Public Employees Collective Bargaining Act (PECBA), Oregon Revised Statutes (ORS) 243.746 (4).
The hearing was held February 12, 2007 Both parties participated in the hearing and each presented evidence and exhibits, and argued its case. The parties elected to make closing statements in writing. They set Friday, March 30, for simultaneous submission of post-heating briefs. On that date, both documents were sent electronically and hard copies were mailed. The hard copies were in my possession by Monday, April 2, 2007.

ORS 243.746 (4)
I have been chosen by the parties to arbitrate their contractual dispute, but it is the following statutory language that governs the matter and guides my findings and opinions in this dispute:1
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1 Oregon Revised Statutes (ORS) 243.746 (4). See also Oregon Administrative Rules (OAR), 115-40-115 (8), a document of the Employment Relations Board. (Dist. Ex. W.)

Where there is no agreement between the patties, or where there is an agreement but the parties have begun negotiations or discussions looking to a new agreement or amendment of the existing agreement, unresolved mandatory subjects submitted to the arbitrator in the parties’ last best offer packages shall be decided by the arbitrator Arbitrators shall base theft findings and opinions on these criteria giving first priority to paragraph (a) of this subsection and secondary priority to paragraphs (b) to (h) of this subsection as follows:

Background Facts
1. The Lane Rural Fire/Rescue District provides fire protection and ambulance services to a population of 15,0002- in an area of 76 square miles.
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2 The Brief History of the District (Dist Ex A), states that the District serves 10,000 people.. District Exhibit X and Union Exhibit 14 state that the population of the District is 15,000.

2. There are four fire stations in the District.
a. The main station is in the Irving section of Eugene This station serves about a quarter of the District’s area. That segment of the District’s total area contains some 52% of the District’s assessed valuation.. A significant portion of the area served by the main station is within the urban growth boundary of the City of Eugene. As properties within the growth boundary join the City of Eugene, they are withdrawn from the District.
b. The remainder of the District is "low density with some small community centers having ‘mom and pop’ stores, cemeteries and churches".
c. Approximately 45% of the District’s calls are outside of the Irving area.
(Dist. Ex. V.)

3. The expired collective bargaining agreementthe first between the partieswas for a term that ran from September 2004 through June 30, 2006.

4. At the time of the interest arbitration hearing, there were 11 members of the bargaining unit: 2 staff chiefs, 1 fire inspector, 1 EMI I Officer, 2 EMT I Firefighters, and 5 EMT P Firefighters. A twelfth bargaining unit position was vacant.

5. Last Best Offers3
a. District’s Last Best Offer:4
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3 The District included the texts quoted herein as its Exhibits B and C.
4 The presentation here of the District’s LBO duplicates District Exhibit B with the following exception: in the exhibit, proposed new language was underlined as were the headings for the articles of the collective bargaining agreement; I have added italics to the proposed new language to distinguish the two.

3. Article 12: Health and Life Insurance
Current contract except amend Section 12.2 as follows:
12.2 The District will continue to pay the full health benefit premium through the current benefit year. Thereafter, the District will pay [the premium and increases up to 8%. Any premium increase in excess of 8% shall be shared equally by the District and the employee not to exceed $20.00 for single party, $35 for two party, or $50 per family per month.] 90% of the health benefit premium and the employee shall contribute 10% of the premium.

4. Article 14: Wages
Current contract except amend Sections 14.1 and 14.2 as follows:
14.1 Effective July 1 2006, increase salary schedule by 4.5%.
14.2 Effective July 1 2007, increase salary schedule by the increase in the January to January All Cities CPI-W plus 1% with a minimum of 2.5% and maximum of 4%.
[14.3] Effective July 1 2008, increase salary schedule by the increase in the January to January All Cities CPI-W plus 1% with a minimum of 2.5% and maximum of 5%.

5. Article 26: Term of Agreement
This Agreement shall be effective as of [September 2004] the date of executionand shall be binding upon the District, the Union and its members and shall remain in full force and effect through June 30, 2008.5
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5 The parties agree that "2008" was a typographical error. The year should be "2009".

6. New Article LRF&R Counter Proposal to Union Training Proposal
Section 1 acceptable as follows:
Fire training for unit member’s will be scheduled a minimum of once per month. Those on duty will be taken off medic unit duty for the time period of the training. Those not on duty shall be compensated [sic] the overtime rate.

Section 2 is acceptable as follows:
As soon as practicable, Standard Operation Guidelines, as required by OSHA, shall be developed with copies provided to all Union employees. The District will update the Union regularly regarding the development of the SOGs.

Section 3 is acceptable as follows:
Employees’ training records shall be kept current and shall be provided to Union employees within [one week] two weeks of submission of a written request. The District will update the Union regularly regarding the updating process of training. The Union understands that bringing existing records current may require several months or more to accomplish.

7. New Article Hours and Overtime LRF&R Counter Proposal

.1 As used in this article:
a. Overtime means a) those hours worked in excess of, and contiguous with, an employee’s assigned shift; or, b) those hours worked in excess of the FLSA standard for the applicable work period.
b. Call-back means those hours worked which are not contiguous with an employee’s assigned shift.
c. Holdover means those hours worked in excess of, and contiguous with, the end of an employee’s assigned shift.
d. Emergency Overtime means those hours worked for fire or other emergencies which require the call-back of additional personnel to augment on-duty personnel or to maintain minimum staffing levels when on-duty employees are involved in emergency situations.
e. Work Shift means those hours assigned in a twenty-four (24) hour period beginning with the start of the employees scheduled shift.
f. Work Schedule means the scheduled work week of an employee (e g. days and hours assigned to work) in his/her established work period. Work period means the established and regularly recurring period of work (number of days) designated under FLSA guidelines. [The work period for all forty (40) hour employees is seven (7 days beginning at pool Sunday and ending at midnight Saturday.] The District reserves the right to continue existing alternative work schedules which in its judgment meet District needs.

.2 Overtime will be rounded to the nearest quarter (1/4) of an hour.

.3 The work week for shift personnel will consist of a fifty-six (56) hour work week (twenty-four [24) hours on/forty-eight [48) hours off). The work week for the 3 tens (l0)/l twenty-four (24) shift shall be based on the fifty-six (56) hour work week. [Except for part-time employees the work week for all-other-personnel in the bargaining unit will be a forty (40) hour workweek.]

.4 [Full time non shift employees who are required to work more than forty (40) hours per week will be compensated for such extra hours at one and one half (1 &frac12;) times the straight time rate.] Part-time employees will be compensated for extra hours at the rate of one-to-one (1:1) for all hours up to forty (40) hours. All hours beyond forty (40) hours will be paid at one- and-one half (1 &frac12;) times the regular rate. Overtime will be rounded to the nearest quarter (1/4) of an hour.

.5 Call-back pay is a guarantee of a minimum number of hours of overtime. Employees will receive call-back pay when called back to work outside theft regular work schedule, except when the hours worked are contiguous with an employee’s shift. When the hours worked are contiguous with the employee’s shift, overtime will be paid only for the actual hours worked. Call-back pay for emergency overtime is four (4) hours.

a. Union’s Last Best Offer6
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6 The Union’s LBO was revised This report presents the relevant portions of the original submission and of the letter stating the revisions.

I. The following is the text of the LBO provided in the Union’s "Petition Initiating Interest Arbitration":

A. Current language where there are no new proposals by either party.
B. All tentative agreements reached in bargaining.
C. Changing the wage scale and Article 14 to reflect increases of 3.5% in July 1, 2006, 3.5% in January 1, 2007, 3.5% in July 1, 2007, and 3.5% in January1, 2008.
D. Change the dates in Article 26 of the contract to reflect a 2 year agreement concluding on June 30, 2008.
E. A one-time position pay differential effective January 1, 2007 for the following classifications: Part-time Inspector, EMT-l/Firefighter, EMI-1/Officer of 4%.
F. Change 11. 1 (d)-Holiday and Vacation, from ".03833 vacation hours per hour of work, to a maximum of 240 hours" to "vacation hours prorated to hours worked based on 11 1(b) above."
G. Change 11. 1(d)-Holiday and Vacation, from "non-24 hour shift" to "40 hour employees".
H. Change 12.2; delete from the current language after the first sentence in 12.2, "Thereafter, the District will pay the premium and increases up to 8%. Any premium increase in excess of 8% shall be shared equally by the District and the employee, not to exceed $20.00 for single-party, $35.00 for two-party or employees with children, or $50.00 per family per month." Add "Thereafter, the District and the bargaining unit will share in the increase for health care in second year of the contract. The Employees, effective July 1, 2007, will pay $25.00 for single-party, $40.00 for two-party or employees with children, or $55.00 per family per month."
I. Change Article 14.5 by deleting the current language.
J. Add new Article 14.5, "When promoted, employees will be placed at the same step on the salary schedule that they currently hold.
K. Add new Article A: "Training and Standard Operating Guidelines: 1. Fire training for unit members will be scheduled a minimum of once per month. Those on duty will be taken off medic unit duty for the time period of the training. Those not on duty shall be compensated the overtime rate. 2. As soon as practicable, Standard Operation Guidelines, as required by OSHA, shall be developed with copies provided to all Union employees. The District will update the Union regularly regarding the development of the SOGs. 3. Employees’ training records shall be kept current and shall be provided to Union employees within one week of submission of a written request. The District will update the Union regularly regarding the updating process of training records."

D. Add new Article B:
1. As used in this article:
a. Overtime means a) those hours worked in excess of, and contiguous with, an employee’s assigned shift; or, b) those hours worked in excess of the FLSA standard for the applicable work period.
b. Call-back means those hours worked which are not contiguous with an employee’s assigned shift.
c. Holdover means those hours worked in excess of and contiguous with, the end of an employee’s assigned shift.
d. Emergency Overtime means those hours worked for fire or other emergencies which require the call-back of additional personnel to augment on-duty personnel or to maintain minimum staffing levels when on- duty employees are involved in emergency situations.
e. Work Shift means those hours assigned in a twenty-four (24) hour period beginning with the start of the employee’s scheduled shift.
f. Work Schedule means the scheduled work week of an employee (e g, days and hours assigned to work) in his/her established work period. Work period means the established and regularly recurring period of work (number of days) designated under FLSA guidelines.

.2 Overtime will be rounded to the nearest quarter (1/4) of an hour.

.3 The work week for shift personnel will consist of a fifty-six (56)-hour work week (twenty-four [24] hours on/forty-eight [48) hours off). The work week for the 3 tens (10)/1 twenty-four (24) shift shall be based on the fiftysix (56) hour work week. Part time employees will work their scheduled hours based on the forty (40) hour work week.

.4 Part-time employees will be compensated for extra horns at the rate of one-to-one (1:1) for all hours up to forty (40) hours. All hours beyond forty (40) hours will be paid at one- and- one-half (1 &frac12;) times the regular rate. Overtime will be rounded to the nearest quarter (1/4) of an hour.

.5 Call-back pay is a guarantee of a minimum number of hours of overtime. Employees will receive call-back pay when called back to work outside their regular work schedule, except when the hours worked are contiguous with an employee’s shift. When the hours worked are contiguous with the employee’s shift, overtime will be paid only for the actual additional hour’s worked. Minimum Call-back pay for emergency overtime is four (4) hours.

II. On January 25, 2007, the Union wrote the Employment Relations Board as follows:
IAFF Local 851 hereby revises our final offer in the upcoming arbitration between IAFF Local 851 and Lane Rural Fire/Rescue to be held on February 12, 2007. Please reference our document dated October 25, 2006.

Article 111(b): Current contract
Article 14 5: Current contract
New Article B (DW delete last sentence.
New Article B (3), delete third sentence
New Article B (4) delete first sentence
All other articles are as proposed in our document dated October 25th, 2006. For clarity, attached find a copy of the revised new article B.7
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7 The text of the attachment follows:
NEW Article B: HOURS AND OVERTIME
As used in this article:
a. Overtime means a) those hours worked in excess of; and contiguous with, an employee’s assigned shift; or, b) those hours worked in excess of the FLSA standard for the applicable work period.
b. Call-back means those hours worked which are not contiguous with an employee’s assigned shift.
c. Holdover means those hours worked in excess of and continuous with, the end of an employee’s assigned shift.
d. Emergency Overtime means those hours worked for fire or other emergencies which require the call-back of additional personnel to augment on-duty personnel or to maintain minimum staffing levels when on-duty employees are involved in emergency situations.
e. Work shift means those hours assigned in a twenty-four (24) hour period beginning with the start of the employee’s scheduled shift.
f. Work Schedule means the scheduled work week of an employee (e g., days and hours assigned to work) in his/her established work period. Work period means the established and regularly recurring period of work (number of days) designated under FL SA guidelines.

.2 Overtime will be rounded to the nearest quarter (1/4) of an hour.

.3 The work week for shift personnel will consist of a fifty-six (56)-hour work week (twenty-four [24] hours on/forty-eight [48] hours off). The work week for the 3 tens (10)1 twenty-four (24) shift shall be based on the fifty-six (56) hour work week. Part-time employees will work their scheduled hours based on the forty (40) hour work week.

.4 Part-time employees will be compensated for extra hours at the rate of one-to-one (1:1) for all hours up to forty (40) hours. All hours beyond forty (40) hours will be paid at one-and-one-half (1 &frac12;) times the regular rate Overtime will be rounded to the nearest quarter (1/4) of an hour.

.5 Call-back pay is a guarantee of a minimum number of hours of overtime. Employees will receive call-back pay when called back to work outside their regular work schedule, except when the hours worked are contiguous with an employee’s shift. When the hours worked are contiguous with the employee’s shift, overtime will be paid only for the actual additional hours worked. Call-back for emergency overtime is four (4) hours.

The parties did not address the mater of the proposed new article B during the arbitration.

Positions of the Parties8Interest and Welfare of the Public
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8 A comment on style: I use ellipses marks (. . . ) within a quotation to indicate omission of a portion of a sentence; I use three asterisks (***) to indicate an omission that bridges two consecutive sentences as well as to indicate an omission of a passage consisting of one complete sentence or more.

The District argues:

The statute tells arbitrators to give "first priority" to "the interest and welfare of the public" in their "findings and opinions " The District is proposing labor stability for the first time in this short-lived unit’s history. If the Union’s proposal of a two-year contract is adopted, labor negotiations will literally continue non-stop, beginning shortly after this award. There will be no time for the District to develop the stability it needs for a positive labor/management relationship. *** (Br. p. 3.)
***
In the present circumstance, the Union would have the parties returning to the table in eight to ten months from the issuance of the arbitrator’s award. Perpetual bargaining is in no one’s interest, not the public’s, not the employer’s, nor the Union’s. It is very expensive for both parties, at a needless and high cost to labor peace. *** [T]here is no public interest served by requiring the parties to confront the same issues before the ink is dry on the award which will be the culmination of over a year long bargaining process itself. (Br. p. 19.)

The Union argues:

In most interest arbitrations, it is difficult to isolate the interest and welfare of the public from the secondary factors listed in ORS 243.746(4). Frequently, employers argue that keeping costs low is in the interest of the public, and unions argue that a well paid work forte is similarly critical to the public welfare. Of course, finding the proper balance between keeping costs reasonable and paying employees a fair wage usually requires looking at the specific secondary factors. Thus, while the statute demands that this factor be given primary consideration, in practice the interest and welfare of the public is usually determined by considering the other factors, including the financial ability of the employer and comparisons with other employees in comparable communities. It is only when one party’s proposal is clearly contrary to the public interest generally that this factor is solely determinative. See e.g. City of Springfield and Springfield Police Assn. (Runkel, 1997). (Employer retirement proposal was unconstitutional, and hence entire final offer was contrary to public interest).
***
The very purpose of collective bargaining is to resolve disputes relating to employment so that employees and employers alike can go about the business of serving their community.

Labor peace is clearly beneficial to the interest and welfare of the public.
(Br. pp.6-7)

Financial Ability

From the Union post-hearing brief:

Determining the District’s ability to pay requires looking at two thingsthe District’s financial position and the impact of both proposals on that financial position. Because Lane Rural’s financial position is so strong, neither proposal will have a significant impact. The District is well able to pay for either proposal. (P. 7.)

From the District’s closing argument:

The District does not argue that it has no ability to pay. *** [T]he facts are that the District is not hoarding assets and building empires. It pays as it goes, and does not borrow to make ends meet, as many do. It has capital expenditure plans for the updating of both buildings and equipment. Just because this District has been a good steward of the taxpayers’ money should not translate to "If the District has the money, any wage increases requested should be granted, regardless of any other factors." The Union needs to make its case straight up, with legitimate comparables accurately valued. (Br. p. 17.)

Ability to Recruit and Retain

The Union states,

Lane Rural Fire District has had the good fortune to have dedicated long term employees and volunteers committed to remaining with the fire district. Since the Eugene area is a desirable location, and firefighting is a desirable career, the District has little difficulty attracting and retaining qualified firefighters This will not change under either proposal (Br. p. 8.)

The District agrees:

The evidence is that no one is leaving Lane Rural for greener ... pastures. (Br. p. 17.)

Overall Compensation

The District:

The District believes its proposed overall wages and benefits are in the average range for employers of like demographic character and population size. (Br. p. 3.)

The Union:

The statute requires consideration of the "overall compensation" of employees compared to similarly situated employees in comparable communities. It is sometimes difficult to determine a single measure of overall compensation where different communities have different titles for employees performing similar work. This problem is compounded by the varied approaches different communities have taken in combining base salaries, benefits, extra duty pay, vacation pay, and other benefits. Nonetheless, as the Union exhibits show, by any measure of overall compensation, Lane Rural lags far behind its comparable communities.

*** In every comparable jurisdiction, Lane Rural lags behind the comparable communities by a considerable amount. For example, no job classification is within 20% of the average total compensation in the comparable communities.
(Br. p. 14.)

"Comparable" Communities

The District argues:

The District believes its proposed overall wages and benefits are in the average range for employers of like demographic character and population size. (Br. p.3.)
***

In theory at least, a reasonable person ought to be able to identify communities roughly comparable in size to the subject jurisdiction (e.g. plus or minus 10% or 15%) and then compare salaries and monetary benefits among them  again, within several percentage points. (Br. p. 4.)

***

The parties agree that Lane Rural Fire/Rescue serves a community of approximately 15,000 residents. The Union apparently does not agree that a sufficient number of roughly like-size "comparator" jurisdictions exist, and therefore includes in its list of communities several [of] which are of much larger size. (Br. p. 7.)

***

The IAFF’s theory, on which it relies here, is that a mega-agency *** may be comparable to Lane Rural (15,000 population served) because within [the] boundaries [of the mega-agency are towns similar in population to that of the District.] Never mind that ... [such communities do not employ] firefighters and the service provider district (community?) is at least seven times the size of Lane Rural in population served and employs approximately thirty-six times the number of paid staff. This is similar to the Union’s reliance on Gresham Fire as a comparable, because it includes Troutdale within its boundaries. The comparisons are simply the largest fire service providers in the state, serving huge population bases, with a significant number of personnel and very high assessed value, against the North Bends and Lane Rurals of the state. (Br. pp. 8-9.)

***

The Union has never offered a rational explanation for exactly how one is to make sense of such "equality" under the statute The Union’s response was merely to say that if it can find a community, regardless of service delivery, that has a similar population, that area’s service provider shall be counted. It is interesting when looking at the total compensation packages referenced, it is the Canby, Hermiston, Lebanon, and Troutdale "comparables" that are all the high dollar numbers. Districts and service providers that are truly comparable when looking not only at population, but service: the Coos Bays, La Grandes, South Lanes, Sweet Homes, and Winston-Dillards of the world present a very different picture in terms of Lane Rural Fire/Rescue’s true comparability.

Aside from the utter illogic of the Union’s theory of comparability, it can eventually have only one result. As the number of arbitrations continue, if arbitrators continue, on any level, to give credence to comparables such as Troutdale (Gresham), it is only a matter of time before those are the statewide wages, as all arbitrations are then based on the use of those mega service providers for comparability. Further, there is nothing to suggest that the District’s proposed comparables are not perfectly viable in terms of the statutory definition of use of population. There is nothing in the presentation that has indicated that the District’s proposed comparables are suspect or should not be used. (Br. pp. 10-11.)

The Union argues:

ORS 243.746(4)(e) *** dictates that the parties are to look only to communities of similar populations providing similar services.

Of course, the legislature could have defined "comparable communities" to include only those who provide services through similar entities *** [or] to include only cities within a specified geographic area, or with a similar proximity to a metropolitan area; or with a similar tax base. *** But it didn’t, It defined comparability based solely on population.

***[To] the extent that there can be any question as to the legislature’s intent in drafting ORS 243.746, the legislative history clarifies that the legislature intended to limit comparable communities to those of similar sizewithout regard to other considerations.

***

[T]he legislature made a conscious choice to change the open-ended, discretionary approach of the pre-SB 750 statute. The current statute does just that  it limits comparable communities to those cities that are of the same or nearest population range.

***

After nearly ten years of interest arbitrations under Senate Bill 750, the question of how to determine appropriate comparable communities is clear. ‘The arbitrator must look to the communities that are closest in population to the community at issue. It matters not whether the communities are geographically close. It is also of no concern whether the communities provide their own service or contract out services with another public entity. So long as the communities are of roughly equal population, they art comparable communities under the statute. (Br. pp. 9-12.)

CPI

The District:

There has been no demonstration that interest and welfare of the public justifies any other treatment in the present case. In strike permitted units, they would not be comparing their wages to those of major metropolitan areas. In strike permitted units, they would not ignore the CPI as requested by the Union, and allege that contracts have greatly exceeded the CPI and therefore, even though statutorily to be considered, should be ignored (ORS 243.746(4)(f)). (Br. p. 20.)

Both the Union and District provided cost of living surveys. The District’s offer in all years is designed to exceed the cost of living. The initial increase for July 2006 to July 2007 will exceed the cost of living by an excess of 2%. (Br. p. 23.)

The Union:

Although management’s proposal exceeds the All Cities CPI, is does almost nothing to address the fact that Firefighters at Lane Rural are over 25% behind market. This is unjustified since the District is financially healthy. (Br. p. 3.)

The CPI has remained relatively low for the past year, ranging from 1.3% to 4.2%. In times of relatively low inflation, wages tend to exceed the CPI. Such has been the case for firefighters throughout Oregon for all of this decade.

The CPI is a useful tool for getting a rough starting point for determining appropriate wage increases. The CPI gives an estimate of the increasing cost of living for employees It also gives an estimate of increasing costs and revenues for employers. What it cannot do is reflect the specific situation between two particular parties. For example, the CPI does not necessarily reflect the financial stability of an employer; it does not reflect the current wages of employees; and it does not reflect the growth of a community. Rather, it merely reflects a change in the status quo of costs.

Because the CPI is a statistical measure that is independent of any particular bargaining relationship, arbitrators usually give it less weight than other factors that better reflect the specific conditions of a particular contract. Thus the employer’s ability to pay and employee compensation relative to similar employees in comparable communities are generally more useful tools for assessing the relative merits of each party’s proposal.

Of course, in Oregon, arbitrators must give first priority to the interest and welfare of the public. ORS 243.746(4)(a). Beyond that, the relative value of the secondary factors will vary depending on the circumstances. As a general rule, however, those factors that are most specific to the circumstances will be most useful. (Br. p. 16.)

Other Factors Traditionally Considered in Collective Bargaining

The District:

In regard to this entire process, it is not as "black and white" as the Union would have you believe  population and only population. ORS 243.746(4)(h) specifically allows the arbitrator, if the arbitrator feels the factors in paragraphs a. to g. are not alone sufficient, to provide evidence for an award to consider other material. There is flexibility. (Br. pp. 23-4.)

The Union did not make specific comment on this criterion..

DISCUSSIONArbitrators shallbase their findings and opinions on these criteria giving first priority to paragraph (a) ... and secondary priority to paragraphs (b) to (h). (Arbitrator’s emphasis.)

* * *

(h)...However, the arbitrator shall not use such other factors, if in the judgment of the arbitrator, the factors in paragraphs (a) to (g) of this subsection provide sufficient evidence for an award.

In furtherance of various arguments in their presentations, the parties have cited a
number of interest arbitrations out of the more than four score that have taken place since Senate Bill 750 amended Oregon’s Public Employee Collective Bargaining Act (PECBA).9 For my convenience, and because these cases present as good a sampling as any of arbitral views about interest arbitration under PECBA, I will rely on these cases in my discussion of the standards.
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9
The following cases cited by the parties address (ORS) 243.746(4)(e):

Cited by the Union

Cited by the District

ERB IA-09-05 City of Coos Bay, Oregon and International Association of Firefighters Local #2935 (Runkel, 2006)

ERB IA-09-04 International Association of Firefighters, Local 2091 and Winston-Dillard Fire District (Brand, 2005)

The Union referred to ERB IA-13-02 Jefferson County Law Enforcement Association, and Jefferson County (Nelson, 2003) to note that the arbitrator in that case assumed that a labor market analysis was appropriate. ERB IA-02-06. City of Springfield and Springfield Police Assn. (Runkel, 1997) was also cited.

Interest and Welfare of the Public

The District:

The statute tells arbitrators to give "first priority" to "the interest and welfare of the public" in their "findings and opinions." The District is proposing labor stability for the first time in this short-lived unit’s history. If the Union’s proposal of a two-year contract is adopted, labor negotiations will literally continue non-stop, beginning shortly after this award. * * * If it was in fact the legislative intent that the interest and welfare of the public encompassed comparability as defined by the Union’s presentation Then all pay will, by definition, eventually equal what is paid by the largest fire service providers (Br. pp. 3-4.)

Perpetual bargaining is in no one’s interest, not the public’s, not the employer’s, nor the Union’s. It is very expensive for both parties, at a needless and high cost to labor peace (Br. p. 19.)

The Union advises, "... [I]t is difficult to isolate the interest and welfare of the public from the secondary factors listed in ORS 243.746(4). *** Thus, *** in practice the interest and welfare of the public is usually determined by considering the other factors ...."

Arbitrator Howell Lankford put it:

Although the statute requires that the interest and welfare of the public be given "first priority" in choosing between the final offers of the two parties, that factor usually cannot be meaningfully discussed before considering comparability, ability to pay, recruitment and retention, etc. Those are the terms in which we traditionally address issues of interest and welfare of the public when the question is one of compensation rate for public employees.
(ERB IA-07-99 North Bend Professional Firefighters, IAFF, Local 2406 and the City of North Bend, Oregon (Lankford, 1999)

Financial Ability

Both parties agree that the District has the financial ability to implement whichever LBO is ordered..

The Union notes:

Information from the District’s 2006 annual audit shows the District is in strong financial shape, with their fund balance at $848,468 or 39,4% of total revenue. According to the District’s 2006 audit the Capital Reserve Fund had an outstanding total fund balance of $1,693,218. This fund is unreserved and can be used for any legitimate purpose. Combined with the general fund, the total fund balance for the District is $2,688,523. (Br. p. 8.)

The District counters:

First, the facts are that the District is not hoarding assets and building empires. It pays as it goes, and does not borrow to make ends meet, as many do. It has capital expenditure plans for the updating of both buildings and equipment. More importantly, even if a wealthy benefactor dies and leaves a few hundred million to the District, this arbitration would still be litigated. Just because this District has been a good steward of the taxpayers’ money should not translate to "If the District has the money, any wage increases requested should be granted, regardless of any other factors." (Br. p. 17.)

During the hearing, the District noted that its main station served an area that contains some 52% of the District’s assessed valuation and that, for the most part, that area is within Eugene’s urban growth boundary. As a consequence and in the course of time, "the District will lose most of the area to the City of Eugene". (Dist.. Ex. V.)

I understand the District’s concern, but consider that this is a matter for the parties to address if and as it happens. For now, the fact is that the District has the ability to pay.

Ability to Recruit and Retain

The Union acknowledges that given the District’s location, the commitment of both the employed and volunteer firefighters, and the attraction of the work, the District’s ability to attract and retain qualified firefighters "will not change under either proposal."

There is one vacancy in the bargaining unit, a part-time position that had been filled by the wife of the former Fire Chief. Of the ten full-time incumbents, all are at the fifth (top) salary step. (Un. Exs. 18 & 22.)

Clearly, the District has the ability to retain its employees. There is no showing that there is difficulty in recruitment.

Overall Compensation

The Union contends, "in every comparable jurisdiction, Lane Rural lags behind the comparable communities by a considerable amount." It continues, "To catch up with the comparable communities, Lane Rural would need to raise its total compensation by approximately 25% over the life of the contract." (Br. p. 14.)

The Union argues:

Under the District’s proposal, wages will increase 4.5% in the first year. However, in the second year, wage increases could be as low as 3.5%. Under the District’s proposal, Lane Rural firefighters barely maintain their current comparable level with other comparable communities in the second year of the contract. (Br. p. 15.)

The District challenges the Union’s methods of calculating the differences between overall compensation of members of the bargaining unit compared to the average of the comparable communities.10
___________________________
10 An illustration: among the data shown in Union Exhibit 84 is a column comparing the total compensation for a ten year employee on the top of the District and of the Union comparables. The average of the nine comparables is $5,783.53; the total compensation for the comparative "person" in the Lane Rural bargaining unit is $4,746.95. The Union reports Lane Rural as being "-21,84%". However, the arithmetic difference between $5,783.53 and $4,746.95 is $1036.58. That figure is 17,922964% of $5,783 53. ($5,783 53 x 17.9%=$1036 58). To be below $5,783.53 (the average of the comparables) by 21 84%, the Lane Rural total would have to be $4520 59. The District points out that the proper calculations are reported in the Union data when Lane Rural is above the average.

Moreover, when the comparators challenged by the District (Canby, Hermiston, Lebanon, and Troutdale) are removed, the difference drops by more than ten percent. That is why the comparators are so hotly contested.

"Comparable" Communities

The District notes, "At the center of the compensation disagreement before the arbitrator lies the parties’ differing interpretations of criteria enunciated in ORS 243.746(4)(d) and (4)(e)." (Br. p. 4.) The Union states, "While ORS 243.746 provides several factors for the arbitrator to consider, this case turns primarily on which communities the Lane Rural [e]mployees are appropriately compared to." (Br. p. 1.)

Ever since passage of SB 750, the argument over the meaning of ORS 243.746(4)(e) has focused on whether or not population and population alone is to be considered when
determining comparables.

It is helpful to hold the text before us:

Arbitrators shall base their findings and opinions on these criteria giving first priority to paragraph (a) of this subsection and secondary priority to subsections (b) to (h) of this subsection as follows.

***

(e) Comparison of the overall compensation of other employees performing similar services with the same or other employees in comparable communities. As used in this paragraph, "comparable" is limited to communities of the same or nearest population range within Oregon, * * *

Arbitrator Howell Lankford has summarized the dispute:

The statutory language-"‘comparable’ is limited to communities of the same or nearest population range within Oregon"-could mean (1) that no community shall be considered comparable if it is not of the same or nearest population range or (2) that nothing except being within the same or nearest population range shall be considered in determining comparability. Arbitrators appear to have agreed on at least the first of these possible senses of the term, but there is no apparent agreement on the second (i.e. that similarity of size, and nothing else, is to be the desideratum).
ERB IA-07-99 North Bend Professional Firefighters, IAFF, Local 2406 and the City of North Bend, Oregon (1999).

The following excerpts express the difference among arbitrators:

On the one hand:

And on the other:

The Statutory Language is Clear.

ORS 243.746(4)(e) specifically limits the definition of "comparable" to "communities of the same or nearest population range within Oregon." The legislature provided no additional criteria in the statute to qualify the term "comparable communities." Comparability is defined solely on the basis of population. ERB IA-14-00 International Association of Firefighters, Local 696, and the City of Astoria (Lindauer 2000)

… I see nothing in the statutory language expressly stating or even implying that an arbitrator cannot limit his/her comparisons to departments within the same geographical area. Indeed, if sufficient comparable departments within the same population range exist in the same geographic area, I believe such departments are the most appropriate comparables. ERB IA-07-95 International Association of Firefighters, Local 2091 and Winston-Dillard Fire District #5 (Lehleitner, 1995)

(I present a more extensive sampling of the "debate" in Attachment A.)

At this point, I think it helpful to review the origins of SB 750. In the following discussion I have relied on two articles from the publication After SB 750. Implications of the 1995 Reform of Oregon’s Public Employee Collective Bargaining Act, published in 1995 by the Labor Education and Research Center of the University of Oregon. The articles are "A Case Study in the Ex Ante Veto Negotiations Process: The Denier-Bryant Act and the 1995 Amendments to the Public Employee Collective Bargaining Law" by Henry H. Drummonds, and "Last Best OfferTotal Package: Oregon’s New Form of Interest Arbitration" by John Abernathy and Tim Williams. (The Drummonds article originally appeared in the Willamette Law Review.)
Drummond reminds us:

...[T]he 1995 Legislative Assembly was among the most "conservative" in recent memory. A newly elected Republican majority in the Oregon Senate and a continuation of Republican rule in the House of Representatives gave the G.O.P. effective control of the purse strings and most policy initiatives. Among these initiatives were proposals to dramatically "rebalance" PECBA in favor of management (P. 22)

Drummonds reports that in the original version of the bill that ultimately resulted in the modification of PECBA, Senators Derfler and Bryant provided for three priority levels, The first priority addressed the interest and welfare of the public and ability to pay, the second priority was "the ability to ... attract and retain qualified personnel". (Pp. 52-3.) Drummonds continues:

Only after considering these "level one" and "level two" priority factors was the arbitrator to turn to lower priority factors, such as "overall compensation" of the employees and "comparison of the overall compensation of other employees performing similar services...." Moreover, the fourth ranking "comparability" factor was limited to Oregon employers in communities with "nearly the same population" and within the "geographic labor market of the public employer"
(P. 53.) (Omission and emphasis in the original.)

Governor Kitzhaber promised a veto. To avoid this, a legislative conference committee began negotiations with the Governor.11 The bill that became law emerged from those negotiations. Of interest here is that in the version that became law, the requirement that population comparisons be "within the ‘geographic labor market of the public employer’" is nowhere to be seen.
___________________________
11 Perhaps more correctly, with Henry Drummonds on behalf of the Governor
In their article, Arbitrators Abernathy and Williams compare the amended PECBA to the original and observe:

The comparability criterion has also been changed to limit comparisons to communities within Oregon of the same or nearest population range. This change is designed to stop unions from making the comparison of lower wage and benefit urban communities to higher wage and benefit urban communities and the similar comparisons of rural to urban communities. Finally, SB750 decrees that the only factor to be considered in selecting comparable Oregon communities is populationnot geography, not similarity of function, not whether the community is rural, urban, or suburban, and not whether the other communities are in the eastern central, coastal, or valley region of the state. Only population The continuing controversy will focus on defining the nearest population range.12 (P. 94.) (Emphasis in the original.)
__________________________
12 In one of the two commentaries that closed the LERC volume, management consultant Lon Mills added a cautionary note:
The most important change in criteria is the definition of comparables for cities and counties. "Comparables" is the criterion most manipulated by arbitrators to support predetermined conclusions. While most criteria, including the definition of comparables will continue to be vulnerable to massaging, arbitrators should be on notice that too much embellishment will probably result in additional legislation.
The second was a commentary by then Senator Randy Leonard. It presented a labor point of view.

Given this reminder of the genesis of SB750, andin particularthe fact that the phrase requiring that comparators be drawn from the "geographic labor market of the public employer" did not survive, I find it difficult to read the law as if it were there.

I agree with those arbitrators who read criterion (e) as being limited "to communities of the same or nearest population range within Oregon." Because of the nature of the case before me, I pause to indicate that I agree with the observation of Arbitrator Brown:

There is no reference made to cities providing similar services but rather the generic word "communities" is used. I do not find in a reading of this criteria any language that would lead me to believe that the previous arbitral precedent to include cities that provided fire services through fire districts as a comparable community had been legislatively overturned," (ERB IA-02-00 International Association of Firefighters, Local 3564, and The City of Grants Pass, Oregon (Brown, 2000).)

However, I also agree with those arbitrators who are uncomfortable when listed comparator’s present patently dissimilar elements. My concern occurs when they express that discomfort through what may be an arbitral modification of the language of ORS 243.746(4)(e).
In instances when arbitrators are not convinced that a party’s list of comparator’s are valid in terms of traditional collective bargaining concepts, even though they are drawn in conformity with the language of (e), I think it is more appropriate to turn to paragraph (h) to apply:

(h) Such other factors, consistent with paragraphs (a) to (g) of this subsection as are traditionally taken into consideration in the determination of wages, hours, and other terms and conditions of employment. However, the arbitrator shall not use such other factors, if in the judgment of the arbitrator, the factors in paragraphs (a) to (g) of this subsection provide sufficient evidence for an award.

In my viewgiven the express language of ORS 243.746(4)(e)it is paragraph (h) rather than paragraph (e) that authorizes an arbitrator to consider such other factors as "geographic labor market of the public employer, urban versus rural character, tax base, and demographic character, and, in Oregon, whether the communities to be compared are in the "eastern, central, coastal, or valley region of the state." I submit that it is paragraph (h), not an expansive reading of (e), that provides protection against the danger voiced by the District:

As the number of arbitrations continue, if arbitrators continue, on any level, to give credence to comparables such as Troutdale (Gresham), it is only a matter of time before those are the statewide wages, as all arbitrations are then based on the use of those mega service providers for comparability. (Br. p. 11.)

The District’s Comparators

The District holds the view that the Union’s selective comparators drive the average upward:

Aside from the utter illogic of the Union’s theory of comparability, it can eventually have only one result. As the number of arbitrations continue, if arbitrators continue, on any level, to give credence to comparables such as Troutdale (Gresham), it is only a matter of time before those are the statewide wages, as all arbitrations are then based on the use of those mega service providers for comparability. (Br. p. 11.)

Unfortunately, the District also engaged in "selective" selection. It chose comparators that drove the average downwards. As noted, the District argues:

In theory at least, a reasonable person ought to be able to identify communities roughly comparable in size to the subject jurisdiction (e.g. plus or minus 10% or 15%) and then compare salaries and monetary benefits among them  again, within several percentage points.

I applied this assertion to the District’s list of comparators.. Taking 15, the percentage that would result in the greater number of possible comparables, I multiplied the District’s population by fifteen percent (15,000 X 1 5%=2250). I then applied that number to the District’s population to arrive at a population figure that ranged from a low of 12,750 (15,000-2,250) to a high of 17,250 (15,000+2,250). I then sorted the list of fire departments provided in District Exhibit X13 by population and identified the departments that were within this range Given the rounding in the Exhibit, I adjusted a bit up and down and arrived at a list that was both more and less than the District’s list of comparators. It was more because it included departments that were not on the District’s list; it was less because it did not include the City of North Bend and the Polk County Fire District #1, although both are on the District’s list of comparators. The list I obtained from sorting the Fire Marshall Report follows, with the District’s comparators identified in boldfaced type:14

GLADSTONE FD

12000

SW POLK CO RFPD

12000

JEFFERSON CO RFPD #1

13000

DALLAS FD

13000

MILTON-FREEWATER RURAL FD

13000

LA GRANDE FIRE DEPT

13000

STAYTON FIRE DEPT

14500

WINSTON-DILLARD RFPD #5

15000

LANE RURAL F/R

15000

COOS BAY F&R

15950

SOUTH LANE COUNTY F & R

16000

SWEET HOME FIRE & AMB DIST

16000

LANE CO FIRE DIST #1

16285

SANDY RFPD #72

17000

ILLINOIS VALLEY RFPD

17000

PENDLETON FIRE & AMBULANCE

17200

_____________________________
13 "Oregon Fire Department Activity and Information/Supplement to the Oregon State Fire Marshall 2005 Report (Hereinafter referred to as the Fire Marshall’s Report or Report.
14 The population estimates are from the Fire Marshall’s Report.

The record created by the District does not show why, of all the departments within the population range suggested by the District, only some were included in its lists of comparators.15 (The District offered two editions of its comparables; one (Ex. J) did not include non-rural comparators, the other (Ex. K) did.)
_____________________________
15 Union Exhibit 53 provides information as to why the Union did not include Dallas, Jefferson, and Stayton (no comparable positions), Lane (outside Union’s population range and not enough positions), but the Union exhibit does not tell why Milton-Freewater was excluded and the District does not address those districts even though their population was within plus or minus 15% of that of the District.

Of more importance, two of the comparators on the District’s liststhe City of North Bend with a population of 10,000 and Polk County F ire District #1 with a population of 23,000are far beyond the District’s suggested range of plus or minus fifteen percent.

I also note that the District’s shorter list of comparables runs from Coos County on Oregon’s southern coast to Wasco County on the Columbia; its longer list extends even further: to Union County on Oregon’s northeast corner. These comparators are far from the geographic labor market of this public employer.

The economic data supplied by the parties was not helpful, in part because of arithmetic errors,16 in part because dates for the data were not supplied and so data from different years could appear on one list, and, even when the parties were considering the same districts, the data did not agree.17 Given the significant differences in data and the arithmetic errors, the many pages of statistics and charts served more to confuse than to enlighten.
_____________________________
16 One example: District Exhibits J and K each state in explanatory note 7 that, for the District, it presents the top salary step for Paramedic/Firefighter ("ff/p") adjusted by 4.5% (the first year increase in its LBO). The exhibit reports that this resulted in a monthly rate of $4,059. Appendix A of the collective bargaining agreement reports that the 2005-2006 salary for Paramedic/Firefighter was $46,908. According to my calculations, when that figure is increased by 45%, the result is $49,018.86 a year or $4084.91 a month. ($46,908 x 4 5%= $2110.86; $46,908 + $21 10.86=$49,018 .86; $49,018 86/12=$4,084.91). For an example of a problem with the Union arithmetic, see footnote 10.
17 An example:

Wages

Union (Ex. 56)

District (Ex. K)

Number of comparables:

9

7

City of La Grande

$4,076.80

$4,810.00

Winston-Dillard Fire Protection District #5

$4,240.21

$4,079.00

City of Coos Bay

$4,386.82

$4,562.00

South Lane County Fire & Rescue

$4,613.73

$4,060.00

The problem may well be that the parties focused on different classifications.

Of significance to my decision, I note that under the District’s calculations, even when 2006 District pay is increased by the District’s offer for 2007 of an additional 4.5% (and without removing the low pay comparators North Bend and Polk County), bargaining unit employees will remain 44% under average (Dist.. Ex. J.) When La Grande and Sandy are added (Dist. Ex. K), the deficit grows to 7,9%. It does not appear that the District’s LBO will sufficiently close the gap between bargaining unit employees and the District’s own comparators.

Summary:

> The District is financially able to meet the costs of both proposals.

> The District is able to attract and retain qualified personnel under the current agreement and will be able to do so under the terms of either LBO.

> The overall compensation currently received by the employees has been considered.

> The Union’s comparison of the overall compensation currently received by the employees in comparison to similar employees in other communities of a similar population range within Oregon indicates that the District’s employees are approximately 17.9% below the average of the comparators selected by the Union.

> Some of the comparators selected by the Union are dissimilar in certain aspects, even through they are similar in population. However, since the factors in paragraphs (a) to (g) provided sufficient evidence for my decision, I did not apply the "other factors" addressed in ORS 243.746(h).

> However, given the fact that under the District’s salary data, and using its complete list of comparators, the District’s employees will be either 4.4% under the average (using District Exhibit J) or 7.9% (using District Exhibit K), even after the District’s first year increase is applied. The District LBO appears to be inadequate to move its employees toward a comparable salary.

ORDER

After reviewing the evidence and argument presented by the parties, and pursuant to the reasoning, considerations, and conclusions presented in the foregoing discussion, it is my determination that the Union’s Last Best Offer shall be adopted.

Respectfully submitted on this the first day of May, 2007, by
Burton White, Arbitrator

Appendix A

Appendix A

On the one hand:

On the other:

ORS 243.746(4)(e) directs the arbitrator to compare "communities of the same or nearest population range within Oregon". The Legislature clearly defines "comparable". They limit the arbitrator to communities of similar size in Oregon. In addition, they provided specific parameters for cities and counties with populations above a certain number and for the State. The legislative criteria speaks to employees performing similar work. There is no reference made to cities providing similar services but rather the generic word "communities" is used. I do not find in a reading of this criteria any language that would lead me to believe that the previous arbitral precedent to include cities that provided fire services through fire districts as a comparable community had been legislatively overturned.

ERB IA-02-00 International Association of Firefighters, Local 3564, and The City of Grants Pass, Oregon (Brown, 2000)

… I see nothing in the statutory language expressly stating or even implying that an arbitrator cannot limit his/her comparisons to departments within the same geographical area. Indeed, if sufficient comparable departments within the same population range exist in the same geographic area, I believe such departments are the most appropriate comparables.

ERB IA-07-95 International Association of Firefighters, Local 2091 and Winston-Dillard Fire District #5 (Lehleitner, 1995)

The Statutory Language is Clear.

ORS 243.746(4)(e) specifically limits the definition of "comparable" to "communities of the same or nearest population range within Oregon." The legislature provided no additional criteria in the statute to qualify the term "comparable communities." Comparability is defined solely on the basis of population.

***

The legislature clearly defined the term "comparable" communities by relying upon the "population range" as the sole basis for determining comparability. Had the legislature intended the "nature of any employer" to be a factor, it would have included that factor in the statute. Accordingly, the clear and unambiguous language of the statute requires the Arbitrator to consider only those communities that are of the same or nearest population range in comparison to the population of the City of Astoria, irrespective of whether they are served by a separate fire district.

***

The Preponderance of Arbitral Authority Supports The Union's Position.

ERB IA-14-00 International Association of Firefighters, Local 696, and the City of Astoria (Lindauer 2000)

While the statute requires a comparison with communities with "the same or nearest population range," it does not preclude the Arbitrator from further narrowing the list of comparable jurisdictions by considering other factors in order to determine the most appropriate comparables.

ORS 243.746 (4) (e) specifically limits definition of "comparable" to communities of the same or nearest population range within Oregon. The legislature provided no additional criteria in the statute to qualify the term ´comparable communities. Comparability is defined solely on the basis of population . . . The legislature clearly defined the term ´comparable´ communities by relying on ´population range´ as the sole basis for comparability. . . . Had the legislature intended the ´nature of any employer´ to be a factor, it would have included that factor in the statute. Accordingly, the clear and unambiguous language of the statute, requires the Arbitrator to consider only those communities that are of the same or nearest population range in comparison.

The District's comparables are consistent with the statutory requirement and more persuasively "comparable" jurisdictions. Suburban entities with nearly the same population as rural entities are not necessarily comparable to the rural entities. They are likely to have higher tax bases because property values tend to be higher in suburbs of cities like Portland than in rural areas. To the extent they are served by larger departments, those departments may exist in a labor market that pays generally higher wages. The departments themselves may have economies of scale and resources not available to a rural department. Thus, while the statute requires arbitrators to choose comparable jurisdictions only from entities with "the same or nearest population range within Oregon," it does not require the inquiry into comparability to end with population.

ERB IA-09-04 International Association of Firefighters, Local 2091 and Winston-Dillard Fire District (Brand, 2005)

Although the statute restricts the jurisdictions that can be compared, it does not require that each of the comparable jurisdictions must be given equal weight. It is normal for a jurisdiction that is in or near a major metropolitan area to have higher pay than a jurisdiction such as Coos Bay that is more rural.

ERB IA-09-05 City of Coos Bay, Oregon and International Association of Firefighters Local #2935 (Runkel, 2006)

In the arbitrator's view, Oregon law requires comparison of overall compensation of other employees performing similar services with the same or other employees in comparable communities of the same or nearest population range within Oregon. However, once those communities have been identified, it does not preclude consideration of other factors such as geographical location or type of economy, e.g., tourism, resource extraction etc. Thus, the Association's exclusion of Malheur and Klamath Counties is not unreasonable